New product planning is the function of senior management personnel and experts from sales and marketing, research and development, manufacturing, and finance.
This group considers and plans new and improved products in different phases, as follows:
1. Idea generation (idea formulation)
2. Screening ideas (Evaluation)
3. Concept Testing
4. Business Analysis
5. Product development
6. Test Marketing
7. Commercialization (Introduction to the Market)
7 stages of the new product development process1. Idea generation:
The focus in this first stage is the search for new product ideas. Few ideas generated at this stage are good enough to be commercially successful. New product ideas come from a variety of sources. An important source of new product ideas is customers. Fundamentally, customer needs and wants seem to be the most fertile and logical place to start looking for new product ideas. This is equally important for consumers and industrial customers.
Product planning starts with creating product ideas. The continuous search for new scientific knowledge provides the clues for the formation of meaningful ideas.
Drucker suggested that sources can be broadly divided into:
(a) Internal Source (within the company) and
(b) External Sources (outside the company)
2. Screening of Ideas: (Evaluation):
It means critical evaluation of the product ideas generated. After collecting product ideas, the next step is to screen these ideas. The main purpose of screening is to abandon further consideration of those ideas that are inconsistent with the company's product policy. Product ideas are expected to be favorable and give room for consumer satisfaction, profitability, good market share and company image.
All ideas cannot be accepted, because certain product plans require large investments, for certain plans raw materials may not be available, certain plans may not be practicable. Many of the ideas are rejected for various reasons and thus eliminate unsuitable ideas. Only promising and profitable ideas are selected for further investigation.
Answers are sought to questions such as:
1. Does the product meet a genuine need?
2. Is it an improvement over the existing product?
3. Is it close to our current lines of business?
4. Is it a completely new line of business?
5. Will it offer customers superior value?
6. Will the new product bring the expected ROI?
7. Does the market accept the new product?
3. Concept Testing:
After the new product idea passes the screening phase, it is subjected to “concept testing”. Concept testing is different from marketing testing, which occurs at a later stage. What is tested at this stage is the “product concept” itself – whether potential consumers understand the idea of the product, whether they are receptive to the idea, whether they really need such a product and whether they will try it if necessary. made available to them.
In fact, in addition to the specific advantage of eliciting consumer response to the product idea, this exercise incidentally helps the company bring the product concept into clearer focus. Concept testing helps the company choose the best among alternative product concepts. Consumers are invited to offer their comments on the precise written description of the product concept, i.e. the expected attributes and benefits.
4. Business Analysis (Market Analysis):
This stage is of particular importance in the new product development process, as several vital decisions regarding the project are made based on the analysis carried out at this stage. Estimates of sales, costs and profits are important components of business analysis and predictions of market penetration and potential are essential.
Are more accurate estimates of environmental and competitive changes that can influence the product life cycle or replacement or repeat sales also necessary to develop and launch a product? A complete cost assessment is necessary in addition to evaluating the profitability of the project.
Market analysis involves a projection of future demand, financial commitment and return. Financial experts analyze the situation by applying break-even analysis and risk analysis. Business analysis will prove the economic prospects of the new product.
5. Product Development:
The idea on paper is converted into a product. The product is shaped according to the needs and desires of the buyers. Product development is the introduction of new products into current markets. New or improved products are offered by the company to the market in order to provide better satisfaction to current customers. Technical evaluations of laboratory tests are carried out rigorously.
6. Test Marketing:
By test marketing we mean what is likely to happen, by trial and error, when a product is commercially introduced to the market. These tests are planned and carried out in selected geographic areas, through the commercialization of new products. Consumer reactions are observed.
It facilitates the discovery of product flaw, if any, that may have escaped attention during the development phase. With this, future difficulties and problems are removed. This type of pre-testing is essential for a product before it is mass-produced and marketed. Sometimes at this stage, management may make a decision to accept or reject the idea of marketing products.
Designing your test marketing program involves making a series of decisions:
1. Where and in how many markets should tests be carried out?
2. How long should test marketing be?
3. What to test?
4. What criteria should be used to determine success or not?
7. Commercialization (Introduction to the Market):
This is the final step of product planning. At this stage, production begins, the marketing program begins to work and products reach the market for sale. It has to compete with existing products to ensure maximum share of market sales and profits. When a product is born, it enters the markets; and like humans, it has a product life cycle.
When launching a new product, the company must make four decisions:
1. When should the product be launched?
The. Right time.
2. Where should it be launched?
I. a single location
ii. a region or
iii. National market.
3. Which groups should be targeted?
The. Existing customers.
4. How should it be launched?
I. Develop an action plan to introduce the new product into launch markets.
Consider the following before launching a new product:
1. Effective market research
2. Ensure product quality
3. Product differentiation
4. Identification of consumer needs
5. Effective Promotion
6. Proper distribution system
7. Correct pricing strategy
8. Knowledge of local needs
9. Choose the correct time
10. Strength of sales force.
Factors that hinder the development of new products:
1. Scarcity of ideas
2. Shorter CLP
3. Higher expenses
4. Fragmented markets
5. Inappropriate incentives
6. High gestation period
7. Non-cooperation from staff
